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July 20, 2012 4:45 PM Regulating Rooms Right

By Ed Kilgore

“The danger of any ordinance restricting commerce is that it will wind up protecting incumbent interests at the expense of new entrants into the market,” notes journalist Blake Fleetwood in “DIY B&B,” his contribution to the July/August issue of the Washington Monthly. And that’s exactly what’s been happening to the rapidly growing and recession-driven home-grown B&B industry as municipal governments around the country pursue a regulatory crackdown that seems designed not to ensure safety and honesty—or even revenue—but simply to protect traditional hospitality interests.

In New York, Fleetwood reports, a unemployed homeowner named Jonathan Hogan found himself confronted by police officers and city officials for the sin of renting out spare rooms over the internet:

For more than a year now, New York City has been enforcing a new state law that makes it illegal for homeowners like Hogan to rent out their house or apartment for less than a month. All across the city, police raids have shut down hundreds of similar informal bed-and-breakfast establishments, with nearly 1,900 different violations issued in under twelve months. Often, the fees associated with the citations stretch into tens of thousands of dollars. Hogan was threatened with a $25,000 fine—all for marketing the empty rooms in his house.

The backstory is that a combination of hotels, hotel unions, and tenant activists (who feared landlords would dump tenants from rent-controlled apartments to begin supplying vacation rentals) lobbied for and secured a new state law in 2010 making rentals for under a month in New York residential buildings illegal. Another tourist-rich city, New Orleans, has begun enforcing a similar ordinance, and several Florida municipalities have moved in the same direction. While some regulation (and taxation) of a previously obscure but now booming internet-based B&B industry seems reasonable, the over-reaction in New York and elsewhere threatens the ability of entirely legitimate enterprises that often makes use of the only asset struggling homeowners possess.

But it’s in New York, notes Fleetwood, that a workable compromise may emerge:

In a rare instance of an industry asking for more regulation and taxes, a group representing New York’s besieged short-term rental owners is backing a proposed state law that would similarly define, regulate, certify, and tax legitimate vacation rental apartments. In return for legitimacy and freedom from harassment and fines, the group, the Short Term Rental and Hospitality Association (STRAHA), says its members would gladly pay the same occupancy tax that regular hotels pay.

One can only hope—for homeowners and travelers alike—this kind of arrangement can be worked out in New York before the backlash against home-grown B&Bs really spreads.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Linkmeister on July 20, 2012 4:52 PM:

    In Hawai'i there's a backlash from neighbors objecting to their quiet streets becoming congested with tourist traffic; it's not just the hotels and their employees who are upset by the B&B growth.

  • Andrew J. Lazarus on July 20, 2012 5:47 PM:

    I stayed in one of those illegal hotel rooms. It was so far from code, I don't know quite what to say. One bed in a walk-in closet and another in the kitchen. A great deal, but some oversight would be useful here.

  • iyoumeweus on July 20, 2012 5:49 PM:

    In my view, this is an attack upon free enterprise. At a time when families, home buyers and owners are suffering losing jobs and wages and need a break this seems to be a simple solution. It also allows visitors to New York City less expensive accommodations then motels, hotels and more expensive B&B's. I do understand the safety and health issues concerns, and the need for periodic inspections; howsoever, these issues can and should be addressed without outlawing the innovating initiative of law-abiding citizens.

  • c u n d gulag on July 20, 2012 5:57 PM:

    Having grown up in NYC, in Queens, until we left at 11, and then returning to live there on my own after finishing college, I can think of THOUSAND'S of things the police could spend their time on that is more valuable than this idiocy!

    Yes, I know it's a law,
    But so is the soda new idiotic soda size law.

    These things are more important than the regular legal and illegal sh*t that happens in city with, what, 6, 7, or 8 million people of EVERY race, religion, color, creed, and sexual orientation?

    NY City is STILL the greatest place I've ever lived - and it's not even close.

    And I did it on a lower-middle class income in my 20's and early 30's - my wildest years.

    If you want to, you can find bargains to save cash, and spend your entertainment money and go and do whatever your little heart and massive libido/ego want to do - from A to Z, from moral to immoral, to legal and illegal, to ethical and non-ethical, etc.

    Why are the NYPD focusing on this bullsh*t?

    Oh yeah, Mayor Mike - the Billionaire Felix Unger of Mayors.

  • g on July 20, 2012 6:40 PM:

    The last three times we visited NYC we rented apartments for short-term periods (1 - 2 weeks), from the tenant. Typically the tenants would be on vacation or working out of town temporarily (think the theatrical industry.) It's a great way for a tourist to visit a city - you have a kitchen and often laundry facilities right there. It doesn't add to the congestion since you're just replacing another resident. What a shame if they are no longer able to do this.

  • byomtov on July 20, 2012 9:29 PM:

    I have the same experience as g. I've rented apts for in NYC for short periods plenty of times.

    If the hotels object, maybe they should consider charging less than $350-400/night for a decent room. And if the city objects maybe it should consider not adding 20-25% to the already astronomical cost of a hotel with their taxes.

    This is one time the libertarians have it right. The hotels are just trying to stifle competition so they can keep their rates up.

  • Texas Aggie on July 20, 2012 11:59 PM:

    So rent for a month and a day, but don't require them to actually be there. And charge them the same for that month and a day that they would have paid for the weekend.

  • CharlieM on July 21, 2012 10:48 AM:


    Or, you know, hey! This is just a friend of mine from Smalltown USA come to stay with me for a few days and see the sights.
    All kinds of ways to get around this kind of stupidness.

  • tony on July 26, 2012 9:23 AM:

    with 15,000 sites offering rentals under 30 days how can NY devote significant manpower and resources to enforcing this stupid law which drives away $160 million in tourist dollars and tax revenues? In cash strapped NY it doesnt make sense to spend millions of taxpayer dollars to suppress homeowners from renting out their homes to pay their mortgage and bills and to drive away 160 million in tourist dollars as well as taxes
    if you legalize, regulate and tax the industry, the state will generate tourist dollars and tax revenues, nyc will be a welcoming place for tourists and allow apartment occupants and building owners to provide safe and affordable rentals thus generating income for themselves
    this law reminds me of prohibition....what did it accomplish? organized crime and speakezyes..nada